Political class and insurance companies in an ugly dance of death

Lots of Americans are starting to feel the immense pain inflicted on all of us by a corrupt, for-profit insurance industry run amok.

A non-partisan Health confidence study recently released by the Employee Benefit Research Institute revealed that 52% or more than half of those surveyed were dissatisfied with the cost of health insurance, a sharp increase from last year's results.

And may I remind you again, that skyrocketing healthcare costs have nothing to do with medical liability. This is a Republican strawman, as bogus as the weapons of mass destruction we were going to find in Iraq.

Criminal insurance companies like Wellpoint, are recruiting premium-paying suckers like you and me, in an effort to achieve profits. They're also trimming overhead.

The company's medical enrollment rose by 5.2 million members to 34.2 million from a year earlier, including about 4.8 million members added through its $6.5-billion purchase of rival WellChoice Inc. in December.

However, Bank of America analyst Joseph France said in a research note that WellPoint's medical enrollment grew by only 27,000 members from the second quarter -- "really disappointing for a company that enrolls business year-round."

Really disappointing? Of course, they take our money, then deny our claims.

Do you know what insurance companies consider "overhead"?

You and me, and our healthcare needs are overhead. Our illnesses are eating into insurance company profits.

WellPoint Inc. said Wednesday that quarterly profit rose 27% as the health insurer better controlled overhead, but it cut its full-year enrollment forecast and reported medical cost trends that disappointed some analysts.

But I fear, I really do, that those of you who think that barring a miracle there won't be Congressional investigations of this corrupt industry might be correct.

The insurance industry is literally throwing money at politicians of both parties. Demanding that our representatives (they work for us, don't they?) investigate under oath, and prosecute their benefactors is not going to be easy.

Here's what the Bible of the insurance industry, Insurance Journal, is reporting about campaign donations to the political class.

Insurance Contributors Favor Republicans; Santorum, Clinton, McGavick Top RecipientsInsurance-related contributors to this year's midterm Congressional races are favoring Republicans 2-to-1 over Democrats while the overall total given by insurance interests appears down from two years ago.

According to the non-partisan Center for Responsive Politics, insurance political action committees and individuals in the industry had given a total of $22.8 million to candidates in House and Senate races as of Sept. 11, with 66 percent or $15.1 million of that going to Republicans.

Democratic candidates for federal offices have received about $7.5 million.

. . .Top recipients from insurance
The CRP tally of top beneficiaries of insurance giving places two politicians not found together on many of the same lists in the top spots and a former insurance executive in the third position.

The top 10 recipients of insurance political donations (based on FEC data released Oct. 11) are Sen. Rick Santorum, R-Pa. ($416,000); Sen. Hillary Rodham Clinton, D-N.Y. ($340,000); Michael McGavick, Republican former Safeco Insurance executive running for Senate in Washington ($280,000); Sen. Ben Nelson, D-Neb., $262,000); Sen. Mike DeWine, R-Ohio ($253,000); Sen. John Kyl, R-Ariz. ($241,000); Sen. Joseph Lieberman, I-Conn. ($239,000); Rep. Nancy Johnson, R-Conn. ($229,000); Rep. Deborah Pryce, R-Ohio ($218,000); and Rep. Mark Kennedy, Republican Senate candidate in Minnesota.

Others top recipients of insurance monies include Sen. James Talent, R-Mo.; Rep. Earl Pomeroy, D-N.D.; Sen. Tom Carper, D-Del.; Sen. George Allen, R-Va.; Rep. Sue Kelly, R-N.Y.; Rep. Eric Cantor, R-Va.; Rep Tom Reynolds, R-N.Y.; Sen. Kent Conrad, D-N.D.; Sen. Olympia Snowe, R-Me.; and Rep. Jim McCrery, R-La.

Back to Wellpoint, the company is not meeting analysts expectations because its medical-loss ration is inching up slightly, so in order to please Wall Street the criminal company will have to squeeze us even more.

The company's benefit expense ratio, a key barometer that measures medical costs as a percentage of premium dollars, worsened by a tenth of a percentage point to 81.3% from the second quarter and by 1.8 percentage points from a year earlier.

WellPoint said the worsening of the ratio, which came in below several analysts' expectations, resulted mainly from adding the New York state prescription drug contract, which has a higher-than-average benefit expense ratio, and increased medical expenses for a federal employee contract.

Would someone, anyone, explain to me why our health--whether we live or die--is equated with worsening Wall Street expectations.

Do all of you recognize that healthcare and health insurance in the United States has nothing, I repeat nothing to do with providing for the common good, or national security? It has one goal only: Wall Street and profits.

NycEve: Author Bio | Other Posts
Posted at 7:14 AM, Oct 30, 2006 in Civil Justice | Health Care | Health Insurance | Insurance Industry
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Again, if insurance companies are making "too much" profit, the answer is to start a competing insurance company that provides the level of service you think is appropriate at the price you think is appropriate while providing the level of doctor reimbursement you think is appropriate. If the insurance companies are doing something wrong, then your new company will simultaneously be profitable and solve all the problems that you think insurance companies are causing the healthcare system.

No excuses. There are plenty of progressives with billions, and if your model is profitable, even conservatives would invest. The only possible excuse is that starting such an insurance company isn't economically feasible -- which means that your criticisms of the insurance industry are wrong.

Posted by: Ted | October 30, 2006 8:27 AM

As always, another helpful comment from Ted.

Think your landlord charges too much rent? Start a competing apartment complex. Think you got gouged on your last car trade-in? Start your own car dealer. Better yet, start your own auto manufacturer. Did your doctor charge you too much for your last operation? Why not show him by just opening your own hospital?

According to Ted, anyone with a decent business plan can get millions of dollars for nothing more than the cost of a stamp.

Posted by: Justinian Lane | October 30, 2006 12:43 PM

Wrong. Wrong on the facts, wrong on the reasoning.

It is not the responsibility of progressives, or the public, to start an insurance company rather than trying to hold current conglomerates responsible and accountable to their customers.

In fact, it seems to me that the insurance industry as created such a protective layer of wealth and power around themselves that the only sword or shield left for the consuming public is the courts. The same courts that the insurance industry would have you believe are driving up their skyrocketing prices.

Creating or managing a new insurance agency will not refund the consuming public the millions of dollars they have spent on frivolous and meritless insurance policies.

Posted by: John | October 30, 2006 1:06 PM

JL writes: "According to Ted, anyone with a decent business plan can get millions of dollars for nothing more than the cost of a stamp."

Justinian doesn't know how to read. I am not claiming that in the slightest. It is Eve who is effectively making the claim that insurance companies are super-profitable. If that were true, then it would be possible to get millions of dollars simply by setting up a competing insurance company. It's because Eve's allegations are bogus, and the insurance market reflects competitive prices and the real costs of doing business (real costs that are raised by litigation), that one cannot simply start up a competing insurance company and make millions.

You can't have it both ways. Either there's room for market entry (and the solution is to set up a competing insurance company) or insurance companies are offering competitive prices that reflect real costs. You have yet to demonstrate that there's a third possibility out there that violates the laws of economics.

Posted by: Ted | October 30, 2006 4:45 PM

Prior to questioning my literacy, Ted wrote: "He also misses the point: he doesn't have to know any hedge fund investors to make an investment pitch to a hedge fund investor, he just needs a stamp and an envelope. That's the nice thing about capitalism."

I can't blame him for forgetting his argument in the other thread. I'd also want to forget I made such a foolish argument, too.

Posted by: Justinian Lane | October 30, 2006 6:02 PM

Justinian knows how to regurgitate words that others have written, but that's not the same as knowing how to read, which requires comprehension he has yet to exhibit. (Note also the difference between "making an investment pitch" and "getting millions of dollars.")

How about addressing my argument, which you and Cyrus have yet to do in multiple threads, as other readers have noticed?

Posted by: Ted | October 31, 2006 8:00 AM

Ted, your argument in the previous thread was that by "making an investment pitch" to a hedge fund investor, I could get the necessary money to start an insurer. You suggested that if my business plan was strong enough, I'd get the money - despite the fact I have absolutely no experience in the insurance industry and am not a licensed insurance broker.

You repeatedly offer the same foolish argument: That because Eve and Cyrus and I observe problems with the insurance industry, the solution is for us to open a competing insurer. Ted, do you REALLY want me to describe in detail just why this idea is foolish? Or are you just trying to waste my time?

Just because someone is astute enough to observe a problem doesn't mean he or she has the skills or resources to solve it. After all, you've spent much of your career describing "problems" with our justice system... but it's still "broken."

Once more, you've chosen to respond to a serious problem with fallacies and flippancy.

Posted by: Justinian Lane | October 31, 2006 10:33 AM

"Ted, your argument in the previous thread was that by "making an investment pitch" to a hedge fund investor, I could get the necessary money to start an insurer. You suggested that if my business plan was strong enough, I'd get the money - despite the fact I have absolutely no experience in the insurance industry and am not a licensed insurance broker."

A business pitch includes biographies of people's experience. Surely you can locate an experienced insurance executive who will want the chance to be the next Warren Buffett because of the unique opportunity you present to them!

If you can't locate such a person, then, yes, your business plan will be weak and fail. But my point was that if you were correct about insurance prices being non-competitively high, you would have no trouble finding people wanting to pick up the free money you seem to think exists.

My idea isn't foolish. I've said "If X then Y," where X is "Eve is correct that insurance companies are gouging" and Y is "You can start a competing insurance company that doesn't gouge can make sizable profit and solve the problem of gouging." You keep saying that Y isn't true, but that doesn't refute my point "If X then Y"--it just proves that X isn't true, which is the proper conclusion of this exercise.

The real problem is, as I've pointed out multiple times and you repeatedly fail to address in multiple threads, is that your view of the way the insurance industry works is completely fallacious, and your attacks are completely unjustified. That's the real reason you won't get financing: because such a business plan of profitably undercutting existing prices is economically impossible.

"Just because someone is astute enough to observe a problem doesn't mean he or she has the skills or resources to solve it."

Yes, but here you're claiming to identify a problem that, if it were really a problem, has a very simple solution that would take only one person to solve, and (if your description of the problem is correct) would be extremely profitable to the person who does try to solve it. There are thousands of progressives who are millionaires, and dozens who are billionaires. Are you saying that not a single one of them is willing to solve this "problem"? What about the thousands of people indifferent to politics who are millionaires, and dozens who are billionaires. Surely one of them is ambitious enough to recognize all the money he could make by taking away business from the gougers, and the profit motive alone would incentivize him, and the political benefits to the left would be irrelevant. Are you saying that not one such person exists, not even Warren Buffett himself, who has plenty of experience with insurance, is relatively liberal, and has a big pile of billions of dollars of cash he has stated he's having trouble finding a place to invest? Doesn't that seem to indicate that the problem isn't what you think it is?

If there were 100 insurance companies, and 99 of them were evil and corrupt gougers, the one good one would get all the business by charging a profitable price below what the other 99 offer. Do you dispute this? If so, why?

If you acknowledge that all it takes is one insurance company charging fair prices to force the others to also charge fair prices, there are two possibilities:

1) Every single insurance company is gouging, and, somehow, there isn't a single person in the world willing to make millions challenging them.

2) Insurance companies aren't gouging.

Occam's Razor says it's #2.

Posted by: Ted | October 31, 2006 6:26 PM

"If you acknowledge that all it takes is one insurance company charging fair prices to force the others to also charge fair prices...."

I don't acknowledge that, so the rest of your post is irrelevant. Why don't I acknowledge it?

I went to two leading online car insurance companies' web sites, both of whom promise to show you the rates of their competitors. In both cases, two OTHER insurers were significantly cheaper than the rest. One insurer, in fact, was over $1,000 cheaper for a six-month policy than the highest insurer.

The fact that some insurers choose to show you the lower rates of their competitors rather than just matching their competitors' prices disproves your theory that all it takes is one fairly priced insurer to impact the entire industry.

Insurance policies aren't like TV's at Best Buy; you can't just pull out the Sunday flyer from competitors and get them to match or beat the price. Their rates are set by complicated formulas and algorithms which differ from one insurer to another.

But of course, you know all of that. You also know that merely having the lowest price isn't enough for one business to take "all the business" from its competitors.

So why do you continue to make such facile arguments?

Posted by: Justinian Lane | November 1, 2006 9:35 PM

Your rebuttal acknowledges that insurance companies aren't gouging, much less conspiring to do so; they're just choosing to insure different risk pools. So where's the problem?

Posted by: Ted | November 2, 2006 2:05 PM

1. The federal government must step in, in a very big and decisve way. They must: 1-investigate 2- regulate the hell out of for-profit insurance companies then 3-offer single payer Medicare for all insurance to all the American people.

Posted by: nyceve | November 17, 2006 9:35 AM


What do you think is the likelihood of any of your three demands being met in the 110th Congress?

Posted by: Seth | November 17, 2006 2:09 PM